Is there a maximum limit on the loan amount for an agriculture gold loan?

The Reserve Bank of India (RBI) has not defined a maximum limit for agriculture gold loan amounts. However, according to RBI guidelines, lending institutions can provide up to 75% of the market value of gold jewellery pledged as the loan amount.

This allows for considerable flexibility in the loan amount made available to farmers as per their specific gold holdings and collateral value.

Farmers with greater quantities of gold jewellery of high purity levels are able to avail larger loan amounts against their gold within the 75% limit set on the market price of gold.

For example, for 100 grams of 22K gold jewellery at an estimated market price of ₹7000 per gram, the maximum permissible agriculture gold loan amount is approximately ₹5,25,000 (75% of ₹7,00,000).

Similarly, a farmer with 20 grams of 24K gold can potentially get a higher loan amount based on the higher collateral value.

There is no fixed cap set on the maximum loan amount. The upper limit depends on the gold collateral and the 75% Loan-to-Value ratio (LTV) rule. This allows financing of both small and large credit needs of farmers.